MAS will seek to build a consortium of countries to explore the potential of digital infrastructure for cross-border use.
MAS (Monetary Authority of Singapore) has published a report on the foundational digital infrastructure necessary for an inclusive digital economy and seamless cross-border transactions around the world.
According to MAS Managing Director Ravi Menon, foundational digital infrastructures will enable interoperable solutions and seamless digital services to reach more people and businesses, at lower cost and greater convenience, while also allowing digitalisation to more broadly pervade within and across economies.
The report highlights the rapid growth of digital solutions as a key factor that has helped enhance the economic and social well-being of millions of people around the world, though it notes that digital inclusion and inter-operability remain as challenges across solutions.
“To create a truly efficient and inclusive digital economy, digitalisation must be end-to-end,” Menon said, delivering opening remarks during the launch of the report on Monday (26 April).
He noted that just as physical infrastructures like railroads helped to advance the industrial economy, digital infrastructures will spur the growth of the digital economy. “We need foundational digital infrastructures and different devices to seamlessly interact with one another.”
Menon said foundational digital infrastructures are public goods that governments have a vital role in providing or facilitating. “Governments can do this through direct provision, or developing open standards for technical implementation, or guidance on best practices.”
The report outlines four key pillars that underpin effective foundational digital infrastructures,
- Digital Identity, to ensure authentication and validation of an individual’s identity, while protecting privacy and security of information
- Authorisation and Consent, to ensure transparent and secure digital transactions through authorised use of data and mechanisms for obtaining users’ consent
- Payments Interoperability, to ensure systems for clearing and settlement of payments between users are interoperable, for seamless domestic and cross-border transactions
- Data Exchange, to enable users to make their data accessible to third parties for the benefit of the users, such as for payments, financial planning, the creation of a digital identity, the creation of credit files, and other services necessary to enable a digital economy
“These are the four essential ingredients to enable end-to-end digital transactions; they collectively meet the foundational needs of a digital economy,” the report says.
While Singapore has implemented the four foundational types of digital infrastructure, it is now exploring how digital infrastructures can be made interoperable and connected with the rest of the world.
“The next phase of the initiative will focus on building a consortium of countries who are keen to explore the digital infrastructure potential for cross-border use,” MAS said.
The work will involve engagement, dialogue and consensus with other central banks and regulators to drive collaboration and explore common frameworks for foundational digital infrastructure.
Through the report, MAS aims to help public sector agencies and players in the financial sector and technology community better understand the key value drivers of strong digital infrastructures.
The report is available here.
The report was compiled in collaboration with the central banks of Brunei Darussalam, Cambodia, Ghana, and Kenya, with support from Mastercard, offering insights from different countries on digital infrastructures, based on their specific circumstances and experiences.